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This from Naomi klein's excellent book "Shock Doctrine: the rise of disaster capitalism".

h/t to Dave Johnson at Campaign for America's Future  , for the text from Klein's book (so I didn't have to type :-))
http://ourfuture.org/...

(Note : he blogs here as davej and has posted quite a few excellent diaries)

In February 1993, Canada was in the midst of financial catastrophe, or so one would have concluded by reading the newspapers and watching TV. “Debt Crisis Looms,” screamed a banner front-page headline in the national newspaper, the Globe and Mail. A major national television special reported that “economists are predicting that sometime in the next year, maybe two years, the deputy minister of finance is going to walk into cabinet and announce that Canada’s credit has run out…. Our lives will change dramatically.

The phrase “debt wall” suddenly entered the vocabulary. What it meant was that, although life seemed comfortable and peaceful now, Canada was spending so far beyond its means that, very soon, powerful Wall Street firms like Moody’s and Standard and Poor’s would downgrade our national credit rating from its perfect Triple A status to something much lower. When that happened, hypermobile investors, liberated by the new rules of globalisation and free trade, would simply pull their money from Canada and take it somewhere safer. The only solution, we were told, was to radically cut spending on such programs as unemployment insurance and health care. Sure enough, the governing Liberal Party did just that, despite having just been elected on a platform of job creation.

Two years after the deficit hysteria peaked, the investigative journalist Linda McQuaig definitively exposed that a sense of crisis had been carefully stoked and manipulated by a handful of think tanks funded by the largest banks and corporations in Canada, particularly the C. D. Howe Institute and the Fraser Institute (which Milton Friedman had always actively and strongly supported). Canada did have a deficit problem, but it wasn’t caused by spending on unemployment insurance and other social programs. According to Statistics Canada, it was caused by high interest rates, which exploded the worth of the debt much as the Volcker Shock had ballooned the developing world’s debt in the eighties. McQuaig went to Moody’s Wall Street head office and spoke with Vincent Truglia, the senior analyst in charge of issuing Canada’s credit rating. He told her something remarkable: that he had come under constant pressure from Canadian corporate executives and bankers to issue damning reports about the country’s finances, something he refused to do because he considered Canada an excellent, stable investment. “It’s the only country that I handle where, usually, nationals from that country want the country downgraded even more – on a regular basis. They think it’s rated too highly.” He said he was used to getting calls from country representatives telling him he had issued too low a rating. “But Canadians usually, if anything, disparage their country far more than foreigners do.”

That’s because, for the Canadian financial community, the “deficit crisis” was a critical weapon in a pitched political battle. At the time Truglia was getting those strange calls, a major campaign was afoot to push the government to lower taxes by cutting spending on social programs such as health and education. Since these programs are supported by an overwhelming majority of Canadians, the only way the cuts could be justified was if the alternative was national economic collapse – a full blown crisis. The fact that Moody’s kept giving Canada the highest possible bond rating – the equivalent of an A++ – was making it extremely difficult to maintain the apocalyptic mood.

Investors, meanwhile, were getting confused by the mixed messages. Moody’s was upbeat about Canada, but the Canadian press constantly presented the national finances as catastrophic. Truglia got so fed up with the politicised statistics coming out of Canada, which he felt were calling his own research into question, that he took the extraordinary step of issuing a “special commentary” clarifying that Canada’s spending was “not out of control,” and he even aimed some veiled shots at the dodgy math practiced by right-wing think tanks. “Several recently published reports have grossly exaggerated Canada’s fiscal debt position. Some of them have double counted numbers, while others have made inappropriate international comparisons… These inaccurate measurements may have played a role in exaggerated evaluations of the severity of Canada’s debt problems.” With Moody’s special report, word was out that there was no looming “debt wall” – and Canada’s business community was not pleased. Truglia says that when he put out the commentary, “one Canadian… from a very large financial institution in Canada called me up on the telephone screaming at me, literally screaming at me. That was unique.”

By the time Canadians learned that the “deficit crisis” had been grossly manipulated by the corporate-funded think tanks, it hardly mattered – the budget cuts had already been made and locked in. As a direct result, social programs for the country’s unemployed were radically eroded and have never recovered, despite many subsequent surplus budgets. The crisis strategy was used again and again in this period. In September 1995, a video was leaked to the Canadian press of John Snobelen, Ontario’s minister of education, telling a closed-door meeting of civil servants that before cuts to education and other unpopular reforms could be announced, a climate of panic needed to be created by leaking information that painted a more dire picture than he “would be inclined to talk about”. He called it “creating a useful crisis.”

Reverse Dejavu , ha? And so many parallels. The Democrats, elected mainly because of the economy, have fully signed onto the deficit hysteria whipped up by right wing think tanks and Republicans (who really don't give a squat about deficits). The president has the temerity to say that though SS does not contribute to deficit, we need to do "big things" by taking a vote to cut benefits. Funny how he refused to do "big things" like prosecuting Wall Street, enacting public option at the least , if not single payer, or even consider a vote on the "People's Budget"?  And besides the apocalyptic rhetoric, we get sweeteners now - high-minded rhetorical crap like "shared sacrifice". Yeah, we need to willingly suspend belief to forget that we the bottom 98% have sacrificed enough over the last 30 years
via reduction in real income, off-shoring of jobs, regressive taxation while the cost of basic necessities kept going up , while the rich kept getting richer.It was corporations in Canada then. It is Wall Street and billionaire hedge fundies like Peter Peterson now, salivating on cuts/privatization of SS/Medicare/Medicaid and other social programs, not to mention the potential armies of compliant serfs for other corporations.Then, as now, lies, damned lies and numbers were used by the powers that be to manipulate facts.

One main difference between then and now is the role of the rating agencies. While Moody's refused to go along with the Canadian corporations and downgrade Canada's debt, now they threaten to downgrade US govt debt. I wrote about the phony, dishonest Moody's and S&P's downgrade threats (of US government debt) here :
http://www.dailykos.com/....
(This is besides the fact they contributed to the financial mass destruction of 2008 by giving investment grade ratings to financial instruments created based on subprime mortgages).

Like the Canadian example shows, once the cuts are locked, it will be very hard to roll them back. That is why need to fight to stop the attacks on Grandma, the poor and the sick. While it was Shock & Awe in Canada and the attack was very swift, here it has been in the making for years. It is up to us to fight back or give in easily. If you haven't already taken action, start following Joan Neleon's excellent action diaries (for the social security defenders group). Keep pounding on Congress and the President to stay off SS, Medicare,Medicaid and other social programs. Demand that Wall street and the rich pay for the crisis they created. The battle is ours to win.

"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it." -- Thomas Paine

First they came for the Communists,  and I didn't speak up because I wasn't a Communist.
Then they came for the trade unionists,  and I didn't speak up because I wasn't a trade unionist.
Then they came for the Jews, and I didn't speak up because I wasn't a Jew.
Then they came for me and by that time no one was left to speak up."

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Comment Preferences

  •  Tip Jar (16+ / 0-)

    NYT reader comment (via Susan Ohanian) : Arne Duncan great example of peter Principle. Failed in Chicago; then promoted so he could repeat failure on national scale.

    by Funkygal on Mon Jul 18, 2011 at 08:31:21 PM PDT

  •  Excellent Diary (7+ / 0-)

    Wonder how many Americans now what Shock Doctrine is? It is play now.....Rahm Emanuel said it in 09'.

    While it was Shock & Awe in Canada and the attack was very swift, here it has been in the making for years. It is up to us to fight back or give in easily. If you haven't already taken action, start following Joan Neleon's excellent action diaries (for the social security defenders group). Keep pounding on Congress and the President to stay off SS, Medicare,Medicaid and other social programs. Demand that Wall street and the rich pay for the crisis they created. The battle is ours to win.

    Action is the antidote to despair---Joan Baez

    by frandor55 on Mon Jul 18, 2011 at 08:44:27 PM PDT

    •  Think people are realising the lies and the damned (6+ / 0-)

      lies that the kleptocrats tell time & again. They may not know the term "shock doctrine" as such but having recently gone through Weapons of mass destruction, TARP and all that crap, it is becoming less & less hard not to miss the pattern.

      NYT reader comment (via Susan Ohanian) : Arne Duncan great example of peter Principle. Failed in Chicago; then promoted so he could repeat failure on national scale.

      by Funkygal on Mon Jul 18, 2011 at 08:56:18 PM PDT

      [ Parent ]

    •  Rahm - I assume you mean "a crisis is a (4+ / 0-)
      Recommended by:
      mimi9, frandor55, Gooserock, Uberbah

      terrible thing to waste"?  He meant it in a positive sense - that we need to reform Wall Street. But yes, the kleptocrats use it more to push their agenda. It is rarely used in favor of the peasants/unwashed.

      NYT reader comment (via Susan Ohanian) : Arne Duncan great example of peter Principle. Failed in Chicago; then promoted so he could repeat failure on national scale.

      by Funkygal on Mon Jul 18, 2011 at 08:58:46 PM PDT

      [ Parent ]

  •  Great diary (6+ / 0-)

    Dave Johnson is excellent and the Shock Doctrine is required reading because this dynamic is everywhere and always repeats itself historically.

    I downgrade Moody's and S&P shitty "only opinions" as they said when they were called to testify about how they gave toxic mortgage  bonds AAA ratings.

    Pro Life??? Conservatives want live babies so they can raise them to be dead soldiers!- George Carlin

    by priceman on Mon Jul 18, 2011 at 08:55:58 PM PDT

    •  Thanks. Yes, if there is one book I recommend (5+ / 0-)

      as required reading - one & only one - it will be Shock Doctrine.  
      Dave J is awesome - like the way how he explains complex issues in simple language.

      Moody's - "sage/oracle" of Omaha Warren Buffet is the largest shareholder the last time I checked. Waiting to see the pearls falling out of his mouth.

      NYT reader comment (via Susan Ohanian) : Arne Duncan great example of peter Principle. Failed in Chicago; then promoted so he could repeat failure on national scale.

      by Funkygal on Mon Jul 18, 2011 at 09:03:10 PM PDT

      [ Parent ]

  •  "Permanent Ruling Rightwing Minority" (3+ / 0-)
    Recommended by:
    Funkygal, Uberbah, ActivistGuy

    That's the concept to keep in mind.

    Our most basic conceptions of freedoms and rights lead to fascism, and that's not an accident.

    The IDEALS of those conceptions don't --but ALL the formulations of them that we presently know do.

    It all depends on maintaining the maximum mismatch between conservative grasp on how our ideas and system actually function, versus liberal ideals about what our expressions of our ideals aspire to.

    Vicious beats brilliant almost every time.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Mon Jul 18, 2011 at 09:57:58 PM PDT

  •  One damage to Canadian unemployment (1+ / 0-)
    Recommended by:
    Funkygal

    insurance: a worker cannot collect if he quits or is fired. It's only legitimate if a worker is laid off. But people have ways of getting around it. For example when I quit, I asked my boss to say I was laid off for 'lack of work' and he did. Also, a worker can appeal when he/she is fired.

    The right-wing also attacked the CBC, the government broadcasting company mostly for telling the truth.

    This above all: to thine own self be true...-WS

    by Agathena on Tue Jul 19, 2011 at 12:09:13 AM PDT

    •  More parallels between Canada and US I guess. (0+ / 0-)

      Heard the liberals were discredited because they moved the right more & more over the years and NDP finished second recently as a result.

      NYT reader comment (via Susan Ohanian) : Arne Duncan great example of peter Principle. Failed in Chicago; then promoted so he could repeat failure on national scale.

      by Funkygal on Tue Jul 19, 2011 at 12:24:44 AM PDT

      [ Parent ]

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